Steps required to file LLP annual compliance

by Legal Salaah Business Registration Solutions in India

Since the inclusion of LLP is necessary to meet certain mandatory requirements. Every year an LLP has to file the details of accounts with their LLP annual compliances and ROCs. Apart from these, there is some other compliance. Below is a list of compliance required by LLP

ROC LLP Annual compliance:

  • LLP is required to file ROC Form 8 before 30 October every year.
  •  Form 8 details the accounting and solvency details.
  •  Besides, LLP is required to file ROC Form 11 before 30 May every year.

Form 11 contains details of all named partners such as whether there are any changes in the management of the LLP.

GST Registration:

  •  Each LLP is required to obtain its own GST registration.
  •  GST registration must be obtained within 30 days of business incorporation, otherwise, LLPs will not be able to issue appropriate GST-related invoices.
  • This is one-time compliance to be completed by the LLP after registration.

GST Return:

After obtaining registration under GST, an LLP will have to submit their GST return filing irrespective of the business transaction.

GST returns can be filed based on the types of GST returns filed monthly, quarterly, or annually.

Books of accounts:

Each LLP is required to keep books of account and maintain them for 8 years in the LLP's registered office.

Audit for LLP:

Only those LLPs with an annual turnover of more than Rs. Forty-lakhs or whose contribution is More than Rs. Twenty-five lakh is required to get their accounts audited.

Income Tax Return:

  • Every Limited Liability Partnership (LLP) has to file an income tax return every year, regardless of its transaction.
  • If covered under audit, it must be filed by LLP on or before 31 July.
  •  If not covered by the audit, it must be filed by the LLP on or before 30 September.
  • If the LLP has entered into an international transaction with affiliated enterprises or has a specified domestic transaction, it is required to file a Form 3 CEB.
  • Limited liability partnerships that require the filing of a Form 3 CEB can file their tax by 30 November.

What are the types of LLP agreements?

All partners need to be compromised without compromising on purpose and growth. A sole agreement may not fit all partners in a satisfactory area.

The describe points are the main types of LLP agreements.

1- Equal Rights LLP (1: 1)

In such LLPs, all partners contribute the same capital, time, and efforts to the LLP. All receive the same remuneration and share the same profit and loss. Decisions are taken mutually. All partners have the same rights, obligations and contribute equally to the management as well as the business.

2- Differential Rights of LLP

Partners in such LLPs have different contributions in terms of capital, energy, and time as well as liability. Hence there is a difference between profit-sharing, decision making, and managerial authority. Can be classified into

  1. The agreement in which the contribution of rights and the sharing of ratios is in proportion. The contribution level can only determine the level of profit sharing.
  2. Agreements in which rights are only in proportion to the contribution, but benefit rights are different. Management rights may be the same or in some other proportion.

LLP Agreement and Tax Planning

Since the LLP is a "firm", all taxation provisions of the "firm" apply, provided the following criteria are met.

There should be a partnership relationship between the parties concerned through appropriate means i.e. LLP agreement. The agreement should specify the individual shares of the partners well. It will have all the details related to participation, their share, and contribution, etc.

To obtain tax benefits, the following points may be taken into consideration while drafting LLP agreements:

  • Adding provision of interest on the capital contribution which will be subtracted from income within the overall limit
  • The agreement should clarify the working partners and the remuneration payable to them to reduce income and hence also tax liability. Remember, to take advantage of this specific benefit, along with the names of the partners, define them as "working partners" in the LLP agreement.

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Created on Apr 3rd 2021 07:21. Viewed 109 times.


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